Tick, tick. August 2nd is the Debt Limit Armageddon. Or Not.

Cut, Cap and Balance should be brought back to the floor and debated so the public knows the truth about it.

You said the democratic position was "not to nickle and dime the poor," but that's not what I was considering. My position on social security and Medicare has always been that adjustments must be made for the future stability of the programs. It's not a matter of nickle and dimeing the middle class and poor; it's about saving the system for the future beneficieries.

Nobody is suggesting that there be no adjustments. Last year's Democratic initiative on means testing was all about adjustments to keep Medicare affordable. As you may remember, Republicans campaigned against those adjustments using spurious talking points about "death panels". If "extremism" refers to people who refuse to adjust Medicare, there are no extremists in the Democratic party. (Also, by this definition of "extreme", Republicans won the 2010 elections on a campaign promise to be extreme, which they're now breaking.)

However, during the discussion on the debt ceiling, the democrats signed a petition that "there is no deal on social security and medicare." We are talking about the debt ceiling and adjustments to social security and medicare.

From money and markets.


and

Are you arguing that the Social Security money doesn't come from the Treasury?

Is it possible you don't know that the Federal Reserve acts as the Treasury's clearing bank? There are detailed contingency plans on which checks of the federal government will clear and which will be held back; Social Security checks - deemed backed by good collateral - will be cleared by the Fed.

But if the Fed Reserve accepts checks worth more than the Treasury has money, have we not raised the debt ceiling?

As even the most elementary knowledge of trust funds would indicate - to anyone not too lazy to look up the links posted here - the Treasury securities now backing SSA checks were issued to its trust fund long ago and are still held there. Not raising the federal debt limit simply blocks issuance of new securities.

I'm sorry to say this, Parados, but you appear to be either too lazy to read what has already been posted in excruciating detail or just acting in bad faith. In either case I have no plans to answer any more questions from you - and of course, there's a 3rd possibility, but I'm too polite to mention it. Goodbye

But how do you propose the US pay off those existing securities without issuing new ones if they don't have the cash?

Are you sure? It's not about the money to pay all debts? Treasuries are based on time periods.

The SS trust fund probably contains treasuries that mature just about every day. Normally those would just be rolled over into new treasuries because they don't need the cash.

However, if HS had read the link she posted (which she accuses others for being stupid for not reading) she would see that the SSA is not getting enough tax receipts to cover it's outlays. That means some treasuries are being redeemed to cover the shortfall. The ONLY way those treasuries can be redeemed is by the US Treasury redeeming them for cash from the Treasury. The only way for the US Treasury to have the cash to redeem the SSA treasuries is by issuing other treasuries to the public since they don't have enough tax receipts to cover their other outlays.

Thx. Seems right to me! (and that's not saying much. LOL)

I would guess that the Treasuries issued to government trust funds are not the same as those issued to the public. They can probably be redeemed at any time the fund needs them without interest penalty.

Of course the government can probably change the rules and the interest on those Treasuries held by the trust funds any time they want to. I can see it now.. the GOP declaring that the SS trust fund is bankrupt because they passed legislation to make it so and then blaming Obama even though he vetoed the bill.

You're probably correct on that score to! Sounds too rational.

I believe the real issue here is which of the government's various payment obligations has priority. In the case of Social Security the government has already collected the taxes required to meet its currrent obligations for Social Security payments. In the original legislation it used the term Trust Fund for the repository of collected social security taxes, and very clearly implied that these were dedicated funds. Subsequent borrowings of money by the treasury from the Social Security Trust involved a sleight of hand that, in effect created new money - a legitamate function of government. However, if the Social Security Trust were in the hands of a private foundation or insurer, a default on payments due to such borrowing would be a criminal offense. Nice to see Parados rationalizing it.

Apparently there is a law which says you can run down the SS, so if they use up the bonds, they run out of money to pay for future SS checks which is against the law. Unless of course they change the law.

It's a crime for issuers of bonds to default on them?
Are you arguing that the GOP is conspiring to commit crimes by looking to default on US bonds?

It's a crime to loot a dedicated Trust of its assets.

The LA Times had a well written article out after talks between President Obama and Speaker Boehner collapsed yesterday, based on interviews with unidentified "insiders." A lot of it could be spin.
There were numerous undisclosed meetings in the last week.
Boehner's side suggested that there could be around $3Tn in spending cuts and $800Bn in tax revenue increases over 10 years. Obama's people seemed to agree, with both sides counting noses and concluding that there were enough votes in the House to approve that. The Repubs would lose some people because of the tax portion and the Dems would lose some because of the spending. But together there were enough votes to make it fly.
Where the tax increases would take place (can we call them that?) would come later, through negotiation over tax reform bringing in $800Bn.
Obama argued that, if reform was not agreed on by some date, the Bush tax cuts would not be renewed again. Boehner held the Dems to the fire by saying that if reform was not agreed to, portions of the Health Care bill (including the requirement that everyone had to have insurance) would not go into effect.
Those "triggers" didn't sit well with House members on either side.
And then the "Gang of 6" weighed in with a proposal for $1Tn in tax increases vs the $800Bn and Obama responded with a proposal of $1.2Tn. Perhaps his people thought he had Boehner on the ropes or perhaps, given the Dems' revolt about a promise of tax reform somewhere down the road, they felt they needed to add the extra $400BN with the use of, perhaps, some smoke and mirrors to get there.

The theory that makes the most sense is that Boehner was trying to be a grown-up, had 95% of a deal, but he went back to be told by Cantor that this deal would pass the House over his dead body. The house REPUBS have decided that this will be a government cutting exercise only, no tax increases, and they are sure that Obama will back down just as the MINN GOV did. I think our choices now are

1) default

2) Obama backs down

3) Obama ignores the debt ceiling and dares the courts to stop him